Situation in Madagascar worsening

Madagascar is in a state of upheaval, and while foreign miners with operations there say they have thus far been unaffected, it’s anyones guess as to how it will all play out.

After months of protests against reigning and democratically elected president Mark Ravalomana – protests that have left over 100 dead – Andre Andriarijaona pronounced himself as head of the army and declared his support for Ravalomana’s rival.

The situation left U.S. Ambassador, Niels Marquardt, to opine in local media outlets that the country of 20 million was on “the verge of civil war”.

Andriarijaona, who replaced overthrown general Edmond Rasolomahandry on March 10, immediately stated that he had the support of the army.

The move came as a feud between rival factions in the country continues unabated.

Since mid-January the country has been plagued with protests against Ravalomana, who blames opposition leader Andry Rajoelina, a former disc jockey and mayor of the capital Antananarivo, with whipping up popular fervor.

Rajoelina, whose ire for Ravalomana was iginited after the state closed down a TV stationed he owned, has declared himself president even though Ravalomana has not left office.

Despite Ravalomana’s refusal to leave the presidential building, and his being seen by the foreign community as the rightful leader, Rajoelina has mananged to tap into the sentiment that Ravalomanana has not dealt with the country’s severe poverty.

For his part Ravalomana is in favour of a referendum on his leadership, Rajoelina has rejected the idea.

In the mid 1990s Madagascar shed its former socialist ways in favour of a World Bank- and IMF-led policy of privatization and liberalization, and while it has shown some steady economic growth since then, it hasn’t been enough to bring peaceful contenment.

When many of the disaffected rose up in protest in the capital the government’s response was to order an army clampdown on protestors.

That move ultimately backfired as it not only galvanized protestors but turned much of the army against the government.

Ravalomanana is a 59-year-old self-made millionaire that has ruled as president since Senegal brokered a peace agreement between feuding factions in the country back in 2002.

Rio Tinto (RTP-N, RIO-L) and Sherritt International (S-T, SHERF-O) are both active in the country and both are keeping their thoughts on the situation to themselves.

“We will not speculate on the political situation in Madagascar,” a spokesperson for Sherritt said in an email. “We are monitoring it closely. To date, the project has not been affected.”

Sherritt owns the largest share in the massive Ambatovy nickel project which sits about 80 km east of the capital. The project is slated to produce 60,000 tonnes of nickel annually for 27 years.

Sherritt owns 40% of the project with Japan’s Sumitomo Corp, South Korea’s state-run Korea Resources, each holding 27.5%, and SNC Lavalin Group holding the remaining 5%.

The cost for constructing the project is pegged at $4.5 billion with Sherritt currently in the midst of exploring options for how it will come up with its required cash commitment.

As for Rio, which operates an ileminite mine in the country, it also says it hasn’t been affected by the unrest.

Rio began producing ilmenite at its QMM mineral sands project in January of this year and plans to ramp up production to 750,000 tonnes a year in 2011. The mine is in the southern Fort-Dauphin region.

Rio owns 80% of the project with Madagascar government owning the rest.

Ilmenite is used in the manufacture of paint pigments and plastics industries.

At presstime the African Union (AU) announced an emergency meeting to deal with what it called “the worsening situation in Madagascar.”